Questions and Answers of Survey Of Economics

What are some opportunity costs of attending college?
Provide an example of how economic efficiency and equity may be in conflict.
Which of the following statements is false?a. Marginal analysis is an examination of the effects of additions or subtractions from a current situation.b. The production possibilities curve shows
To what extent do you think normative economic analysis, as opposed to positive economic analysis, determines our nation's public policy decisions made by government? Why? Is that “good” or
A model (or theory):a. Is a general statement about the causal relationship between variables based on facts.b. Helps explain and predict the relationship between variables.c. When expressed as a
Which of the following is a normative economic statement?a. The unemployment rate for the United States is currently 5.4%.b. The inflation rate in the United States is too high.c. An increase in
Does economics help to teach us how to approach problems, or does it provide us with a set of answers to problems?
Respond to the following statement: “Theories are of no use to me because they are not very practical. All I need are the facts because they speak for themselves.”
Microeconomics is concerned with:a. Some specific segment of the economic system.b. The entire economic system.c. Reducing national unemployment and inflation rates.d. What causes changes in the
Why isn't money a resource?
How might a rich nation answer the three fundamental economic questions differently from a poor and developing county?
Which of the following is not a resource?a. Landb. Laborc. Moneyd. Capital
Scarcity:a. Exists because resources are unlimited while human wants are limited.b. Means we are unable to have as much as we would like to have.c. Will likely be eliminated as technology
Provide examples of economic investigations that would be classified as macroeconomic investigations and others that would be classified as microeconomic investigations.
What is the opportunity cost of government spending on servicing the interest on the national debt?
A progressive tax means the percentage of income paid as taxes:a. Increases as income increases.b. Decreases as income increases.c. Remains the same as income increases.d. None of the above.
Which of the following statements is true?a. The most important source of revenue to the federal government is personal income taxes.b. National defense currently accounts for the largest
Some people have argued that the American workers’ movement would have been more successful in achieving its goals if it would have been more organized across labor markets; if it would have
How are price controls related to anti-poverty programs?
Which of the following statements is true?a. Income distribution in the United States has become more unequal since 1929.b. The Lorenz curve indicates the degree of discrimination in an
Describe how investment in human capital could help solve the poverty problem.
The poverty line:a. Separates those on welfare from those not on welfare.b. Equals three times an economy food budget.c. Equals the median income level.d. All of the above.
Based on real-world evidence, what is the profile of a family in poverty?
Which of the following statements is true?a. All people in poverty are on welfare.b. Unemployment compensation is an in-kind transfer.c. Temporary Assistance to Needy Families (TANF) is an example
Typically, how long do those in poverty who are receiving public assistance (welfare) remain on the welfare roles?
What are the three major goals of any short-run poverty relief program?
How well would a negative income tax system do in relation to the current welfare programs in maximizing the poverty relief?
How well would a negative income tax system do in relation to the current welfare programs in maximizing the incentive to work?
How well would a negative income tax system do in relation to the current welfare programs in minimizing program cost (taxes)?
What is the best way to combat poverty over time?
Why hasn't the negative income proposal been implemented as public policy in the United States?
If males (whites) are paid more than females (blacks), is that proof of discrimination?
Which of the components of GDP must increase if we are to experience greater rates of economic growth?
GDP:a. Is the dollar value of all the final goods and services produced within the borders of a nation.b. Includes intermediate and final goods and services.c. Minus an allowance for depreciation
If the illegal drug trade was legalized what would happen to GDP?
Which of the following statements is true?a. GDP is an important measure of macroeconomic activity because changes in GDP impact employment, incomes, further spending, and standards of
What would happen to GDP if a significant number of house-spouses who were previously staying home to care for their children began taking jobs and placing their children in day-care? Would the
Which of the following statements is true?a. The inclusion of intermediate goods and services into GDP calculations would underestimate our nation’s production level.b. The expenditures approach
What happens to disposable personal income if tax rates increased?
Using the expenditures approach, GDP equals:a. C + I + G + (X - M).b. C + I + G + (X + M).c. C + I - G + (X - M).d. C + I + G - (X - M).
How could nominal GDP increase but real GDP remain the same?
Which is a better indicator of growth in job opportunities: an increase in nominal GDP or real GDP?
Is it possible for real GDP to increase and there to be no increase in employment?
Determine the effect on GDP for the following.a. Consumption increases.b. Government spending falls.
What causes the business cycle?
Which of the following statements is true?a. The business cycle is caused by changes in total spending.b. A recession is caused by a decrease in total spending.c. A recovery is caused by an
What is the general cause of all recessions? What is the general cause of all expansionary phases of the business cycle?
Which of the following statements is true?a. The four phases of the business cycle, in order, are: peak, expansion, trough, recession.b. When unemployment is rising then real GDP is rising.c. The
What are the two major problems associated with a recession?
If Sam Jackson voluntarily quits one job, possesses marketable skills, and expects to find a new job in a few weeks, Mr. Jackson is considered:a. Frictionally unemployed.b. Cyclically
Why is a slow growing economy a problem during a recession?
Which of the following is true?a. The GDP gap is the difference between full-employment real GDP and actual real GDP.b. We desire economic growth because it increases the nation's standard of
What is the major economic problem during the expansionary phase of the business cycle?
What should government do with its spending and taxes during a recession? Why?
What should government do with its spending and taxes during an upturn in the business cycle? Why?
What should government do with the money supply to combat a recession? Inflation?
Which of the following statements is true?a. Deflation is an increase in the general level of prices.b. The consumer price index (CPI) measures changes in the average prices of consumer goods and
If the consumer price index (CPI) in 2019 was 200 and the CPI for 2020 was 230, the rate of inflation was:a. 15 percent.b. 7.5 percent.c. 30 percent.d. 230 percent.
Why might homebuyers hope for inflation?
Last year the Olsen family earned $70,000. This year their income is $77,000. In an economy with an inflation rate of 8 percent, we can conclude that the Olsen’s nominal income:a. And real income
What should happen to the money supply to combat demand-pull inflation?
Which of the following statements is true?a. Demand-pull inflation is caused by excess total spending.b. Cost-push inflation is caused by an increase in resource costs.c. If nominal interest rates
If you received a 7% pay raise, did your real income necessarily rise by 7%?
Which type of inflation is usually most pronounced during the expansionary phase of the business cycle?
If workers push for higher wages and receive them, could this create inflation? If so, what kind of inflation would this create?
The aggregate demand curve:a. Shows the level of real GDP purchased in the economy at different possible price levels during a period of time.b. Shows the level of real GDP produced in the economy
What can cause an increase in aggregate demand (AD)? Predict the impact of an increase in AD on real GDP and the price level along the three ranges of the aggregate supply (AS) curve.
The aggregate supply curve:a. Shows the level of real GDP produced in the economy at different possible price levels during a period of time.b. Is horizontal in the Keynesian range.c. Is vertical
Can equilibrium occur below full employment? Why, or why not?
If aggregate demand increases in the intermediate range of the aggregate supply curve, then:a. The price level rises and real GDP falls.b. The price level rises and real GDP rises.c. The price
What impact would an increase in the nation’s money supply, or a federal government budget deficit, have on the real GDP and the price level in the macroeconomy? What phase of the business cycle
Demand-pull inflation is caused by:a. An increase in aggregate demand.b. A decrease in aggregate demand.c. An increase in aggregate supply.d. A decrease in aggregate supply.
What impact would a dramatic increase in the world price of oil have on the national economy?
If AD increases quite a bit pushing the economy toward full employment, but was creating politically unacceptable high rates of inflation, what might the government do with its spending and taxes to
Given aggregate demand, a decrease in aggregate supply creates:a. A higher price level and a higher GDP level.b. A lower price level and a higher GDP level.c. Cost-push inflation.d. Demand-pull
What happened in terms of the AD/AS model during the Great Recession? What happened in terms of the AD/AS model during the 2020 COVID-19 Recession?
Which of the following statements is true?a. Fiscal policy is the manipulation of the nation’s money supply to influence the nation’s output, employment and price level.b. Discretionary fiscal
Which portion of the Laffer curve did the supply-siders argue we were located when they recommended tax cuts and predict a rise in tax revenues in the early 1980s? Where on the Laffer curve were we
To combat a recession, Keynesian fiscal policy recommends:a. An increase in taxes.b. An increase in government spending.c. An increase in taxes and a decrease in government purchases to balance the
Because of the automatic stabilizers, a decline in the level of economic activity will cause:a. A reduction in tax revenues collected.b. An increase in government spending.c. A greater budget
Which of the following statements is true?a. A reduction in tax rates along the downward-sloping portion of the Laffer curve would increase tax revenues.b. According to supply-side fiscal policy,
What happens to the spending multiplier if there is an increase in the marginal propensity to consume?
What would likely happen to the level of economic activity if the government took the necessary steps to reduce the deficit significantly in a relatively short period of time?
When is the most appropriate time to reduce the deficit?
Is the tax imposed on cigarettes a progressive, proportional, or a regressive form of taxation? Why? What are some other examples of this type of tax?
The major federal government expenditure is on:a. National defense.b. Income security.c. Foreign aid.d. The interest expense of the national debt.e. None of the above.
What are some examples of payments people must make for government goods or services based on the ability-to-pay principle?
Which of the following statements is true?a. Sales, excise, and flat-rate taxes violate the ability-to-pay principle of taxation fairness because each result in a greater burden on the poor than the
What are the general purposes of taxes?
If federal government wished to reduce the deficit to any significant degree without raising taxes, where would the reduced spending likely to have to come from?
How politically popular is it for government to reduce spending or to raise taxes?
Which of the following statements is true?a. The national debt is the current year’s amount by which the government is spending more than it collects as taxes.b. Deficits are financed by the
How could deficit spending help offset the otherwise lower rates of economic growth associated with a crowding-out effect?
“Crowding out” refers to federal government deficits financed by:a. Borrowing that increases interest rates and thereby reduces private spending.b. Increasing taxes which reduces private
How could a greater fiscal deficit create a greater trade deficit?
An increase in our federal government’s budget deficit will likely:a. Increase the national debt.b. Increase interest rates.c. Decrease borrowing by households and businessesd. Be less
Which of the following statements is true?a. The national debt as a percentage of GDP is greater today than during any other period in our nation’s history.b. A sizeable external national debt
What would you do to reduce the deficit?
Anything can be money if it acts as a:a. Unit of account.b. Store of value.c. Medium of exchange.d. All of the above.
Why aren’t credit cards money?

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